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Bridgeton Industries

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Pankaj Sharma

on 19 October 2012

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Transcript of Bridgeton Industries

Bridgeton industries Automotive Component and Fabrication Plant Analysis Bridgeton's Cost System So, what was happening?? Timeline Getting to know
Bridgeton Industries Timeline cont'd... Allocation of overhead to direct labor
Unit cost is direct labor, direct material, and overhead
Cost allocated in different accounts for different activities Organizational Structure Bridgeton Industries Automotive Component and Fabrication Plant (ACF) ACF's Diesel engine plant The Diesel engine plant that has nothing to do with ACF ACF's other production plants Production of:
Fuel tanks
Front and Rear doors
Muffler exhaust systems and Oil Pans What the hell happened in those model years? Early
1900's 1970
Bridgeton buys ACF Bridgeton closes the ACF diesel engine plant Skilled trades positions eliminated where possible
Some tradespeople with unique skills moved
Machinery, Equipment and Building written down And the following model years...... 1987 1990 1988 An example:
Improved the die change time from 12 FREAKIN' hours to 90 minutes

The japanese were doing it in 10 minutes
Bummer! ACF's troubles The demand for stainless steel manifolds MIGHT go up

BUT..... as they say.....
"The light at the end of the tunnel might be an oncoming train!" Manifolds have been downgraded from Class 2 to Class 3 ACF on a seesaw On a more positive note From the underpaid
(but incredibly gifted) consultants Foreign competition Rising gasoline prices Shrinking pool of
production contracts Analysis of competitive position based on:
Customer service,
Technical capability, and
Competitive cost position Strategic consulting firm hired Products classified into Classes 1, 2, and 3 1986 Bridgeton builds two diesel engine plants
One of them at ACF 1985 Things started to change..... The competitive
environment Overhead Rates 1987 | 1988 | 1989 | 1990
437% | 434% | 577% | 563% Other Bridgeton companies Class 1
Own Costs <= Competitor's costs

Class 2
Own costs > Competitor's costs

Class 3
Own costs > Competitor's costs
more than 15% Outsourced Oil pans and muffler exhaust (classified as Class 3)

Introduced programs to improve product quality and productivity Classification Class 1 - Fuel tanks

Class 2 - Manifolds, Front and Rear doors

Class 3 - Muffler exhaust systems and oil pans
Full transcript